July’s inflation report came in hotter than it has all year — but not for the reasons most people expected.
The core Consumer Price Index (CPI), which strips out food and energy, rose 0.3% from June. That’s the fastest pace since January. For developers and investors like me, that’s not just an academic number — it’s the kind of data point that can tilt the entire cost of capital landscape.
Interestingly, prices for tariff-exposed goods didn’t spike as much as feared. That’s giving markets more confidence the Fed will cut rates next month. In fact, as soon as the numbers hit, traders pushed the odds of a September 17th rate cut to almost 90%. If you’re financing a major project — whether it’s an apartment community, mixed-use development, or value-add repositioning — that shift in sentiment matters. A quarter-point move on hundreds of millions in construction financing is real money.
But here’s the part I’m watching more closely than the CPI number itself:
The Bureau of Labor Statistics (BLS) — the agency that produces the jobs and inflation data — is suddenly in the political crosshairs. President Trump recently fired its nonpartisan commissioner and installed EJ Antoni, former chief economist at the Heritage Foundation and contributor to the Project 2025 policy blueprint. Antoni has floated ending the monthly jobs report entirely.
For decades, the BLS has had “gold standard” credibility globally. Investors, lenders, and developers rely on its independence. If the market starts questioning whether the data is objective, we’ll see volatility spike — and financing decisions will get a lot harder.
On the bond side, US two-year yields dipped three basis points after the report, while longer maturities stayed under pressure thanks to rising yields in the UK and eurozone. German 30-year yields hit their highest level since 2011. Translation: the short end of the curve is telling us the Fed might ease, but the long end is still flashing inflation risk.
And because this is 2025, here’s the AI subplot
Perplexity, the AI startup, just made a $34.5 billion bid for Google Chrome. Yes — the browser. They want to swoop in before US antitrust rulings force Google to sell. OpenAI has also expressed interest.
On the surface, that’s tech world drama. But as an investor, I see a bigger pattern: the potential breakup of entrenched platforms creates entirely new value chains — and that trickles into commercial real estate demand. Data centers, engineering hubs, and AI campus developments could accelerate in response to shifts like this.
One more macro note worth your time
Treasury Secretary Scott Bessent is selling the idea that future growth will cover the cost of a widening deficit. Critics are asking a much harder question: how exactly will today’s kids — tomorrow’s taxpayers — pay for borrowing this aggressively?
For real estate developers, the takeaway is simple: we’re operating in an environment where monetary policy, fiscal policy, and politics are colliding. That collision will decide the direction of rates, liquidity, and asset pricing in the next 12 to 18 months.
If you’re reading this and wondering what it means for your next project — my answer is the same one I give my own team:
Watch the data, but also watch who controls the data. Markets can adjust to numbers. They get much shakier when they stop trusting the source.